Insurance Insights—The Involvement Factor

One of the greatest unsolved issues in the insurance and financial services industry is the business model of the future.

A recent study from IBM indicates that the “trust gap” between the industry and the end-consumer is fueling a “business model identity crisis.” In other words, the thing that is keeping most of the industry executives awake at night is the fact that they do not know what the best way to deliver their products and services will look like in the future.

And it’s no surprise. They’ve tried many solutions to the business model conundrum (they are expensive and “expensiver”). Face-to-face is effective but not always efficient. Online is efficient but not always effective. Direct to consumer causes angst, channel conflict, dark threats and a lot of emotionally charged procrastination. Direct to consumer puts smaller companies in a position to steal distribution “share,” and it leaves larger brands with the task of coming up with a new way to “feed the beast.”

So where does one start to figure out how to finally crack this code?

One of the places to start looking is in the area of insight or deep understanding of how the consumer is thinking, feeling or behaving (or not behaving).

While many researchers and marketers feel they have a good handle on the consumer attitudes and beliefs about the products and services, there is an area left relatively unexamined. That unexamined area is “the involvement factor.”

The involvement factor is the level at which a consumer is actively engaged with your product or service and the reason for that engagement. Many (but not all) types of insurance are low-involvement products. There’s no reason to engage unless forced to by the need for using the product or the need to transact a premium or other administrative change. That model stands in stark contrast to a product like an iPhone. The consumer is highly involved, using it several times an hour and doing so willingly, looking for that message, call or vital piece of information.

It may be helpful to look at insurance and other products and services as plotted in the chart below, with the X axis as the “involvement level” and the Y axis as the emotion associated with “the reason for engaging.”

Note that these examples are just to offer a framework for thinking. While some of these categories will be placed in different boxes based on the consumer’s individual emotions and situation, it’s important to think about these dynamics when innovating a solution.

In the case of insurance products in the “Negative Emotion/Low Involvement” category, perhaps it is worth developing more insights and ideas that bear out ways to create more positive feelings and higher levels of involvement versus spending energy on marketing/awareness alone.

If you dial the clock back on the insurance category by several decades when it was growing, it may have landed in or nearer to the upper right quadrant. Why? Because of the debit system. Before direct billing, “check-o-matic” and online payments were available, agents came to the door weekly to collect a few dollars for premiums. And they often stayed for coffee and had a nice conversation with the person in the household. That dynamic put the product into the space of higher involvement, and more positive emotions associated with that involvement. While that is not to suggest that we recreate the debit system, perhaps there’s another way to push insurance into a higher involvement, less negative space. Perhaps we could take a lesson from a dentist.